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Regulation and Compliance > Federal Regulation

President Obama Proposes Pay Freeze for Federal Workers

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President Barack Obama proposed a two-year freeze on Monday on the pay of federal workers and vowed to work with Republicans to cut the ballooning budget deficit.

Reuters reports that the pay freeze is part of an effort by Obama to push back against Republicans, who have labeled the president and his Democrats "big spenders" while taking aim at his policies such as an $814 billion stimulus package and health care reform.

The White House estimates the worker pay freeze would save about $2 billion in the current 2011 fiscal year and $28 billion over five years. It would require congressional approval, according to Reuters.

Obama said both Republicans and Democrats faced a challenge "to get federal spending under control and bring down the deficits that have been growing for most of the last decade."

But he warned that an overly abrupt reduction in federal spending could harm the fragile economic recovery.

"There's still a lot of pain out there and we can't afford to take any steps that might derail our recovery or our efforts to put Americans back to work and to make Main Street whole again," Obama said.

"So we can't put the brakes on too quickly," he said.

Reuters notes that fresh from big victories in congressional elections earlier this month, Republicans have vowed to make deep cuts in domestic spending. Republicans have tried to put Obama on the defensive about the budget deficit, which hit $1.3 trillion in the fiscal year that ended in September.

Virginia's Eric Cantor, the No. 2 Republican in the House of Representatives, said he was "encouraged" by Obama's pay-freeze proposal and said he hoped congressional Democrats would also support it.

"We are pleased that President Obama appears ready to join our efforts. As the recent election made clear, Americans are fed up with a government that spends too much, borrows too much and grows too much," Cantor said in a statement.

Republicans in Congress have tried unsuccessfully several times this year to freeze federal pay in an effort to cut the deficit, but the move was opposed by Democrats, the majority party in the House as well as the Senate.

Reuters says Senate Republicans two weeks ago agreed to a proposal that would freeze federal hiring in non-security areas, which would gradually shrink the size of the government by not filling vacancies created by retirements. The proposal is nonbinding and merely reflects sentiment among Republicans in the chamber.

As part of an effort to reach out to Republicans in the aftermath of the election, Obama will meet with leaders of both parties Tuesday to discuss legislative issues for the remaining weeks of the current congressional session.

The top issue at the meeting will be a discussion over whether to extend the Bush-era tax cuts. Obama favors continuing the cuts only for middle-class households while Republicans want to extend them across the board.


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